11 Responses

Nice Post!
What are your thoughts on changing ones asset allocation based on valuations? Do you see value to tweaking ones portfolio based on it from time to time? Times like the the stock market peak in early 2000 for example. Wouldn’t it be wise in such situations to reduce stock holdings by some degree? Currently international developed and emerging market stocks are cheap. So coversly, wouldn’t you agree increasing their allocation in ones potfolio is a wise choice? If u agree, can u suggest a framework to follow? As in how much to increase?

This is something that most men try to do. And it usually costs them money, long term. It’s a bit like playing with a casino. I’m more dispassionate with my approach because I’ve seen the peer-reviewed studies that suggest people aren’t good at speculating (nor are the banks). If you rebalance once a year, you’ll always be taking some of the winners off the table and adding to some of the losers.

Based on my observations, women are better at doing this than men. Men think too much. That’s why studies on brokerage accounts usually show that women’s returns beat men’s returns. Women don’t know as much as men. But they don’t mess around as much.

For Non-American resident expats, especially for those who live in countries with no US tax treaty, there are two kind of securities available – distributing and accumulating. Depending on the resident country’s tax rules, either one or the other might be more suitable. Correct me if I am wrong, but I didn’t see this info in the first edition and think a lot of expats might find it useful.

Also on several pages, you recommend SSAC as the global fund choice. It has an expense ratio of 0.60%. While it does add simplicity and covers the entire world, a cheaper option would be IWDA + EIMI.

Thanks Andrew. You book was instrumental in changing my view towards finance.

I just want to thank you for all of your help with making investing easier and finally transparent. I’m a Canadian expat and was wondering your current stance on Fundamental Index ETF’s? You gave some really good information in your second book and I was keen to build a portfolio of them but upon a quick search on TD Direct International, (CRQ) iShares Canadian Fundamental Index ETF and the other iShares Fundamental ETFs are not available as they’ve moved from the TSX to the Aequitas NEO Exchange.

The only option I seem to find, to keep my funds in Canadian dollars is to invest in (PXC) Powershares Canadian Fundamental ETF.

Your tone in your book and some articles you’ve written seems like you had some initial interest with them and I’m curious where you are at now? Also, are there any other fundamental Index ETFs available to buy in CDN dollars?

Jason,
Both as great bonds funds. IMO, you are better off sticking with VSBSX (Gov short-bond) than changing to VBIRX (short-bond).
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VSBSX is 99.8 AAA rated while VBIRX is 87.7 A or better. VSBSX has slightly less yield but provide much better protection in a market downturn. I recommend people stick with the highest rating bonds they can buy (instead of corp/junk bonds) and up their equity a few percentage. This will keep the expected return the same while reducing overall volatility.

Why is there so much advice on ..invest on low cost index funds..I also read AES blog and they also recommend it….but then if one tries to do that…as an expat I mean…one finds it is very costly…like a minimum amount of £100,000 initial amount. So we use ETFs…I wonder sometimes if ETFs (for which I am most grateful to be able to access) are the second rate cousins…for those of us receiving average expat incomes. I would love to invest monthly into an index fund..but as an expat seems not possible.

I think most journalists and financial academics consider a portfolio of index funds to be the same thing as a portfolio of ETFs. If you asked me, “How do you invest?” I would tell you that I invest in a portfolio of low-cost index funds. Technically, I invest in ETFs. But ETFs just provide a different way of buying the same thing.

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Welcome! I’m Andrew Hallam

Many people aren't comfortable talking about money. It's not usually a conversational dinner-time topic, and its principles are rarely taught in schools. My goal is to have a "conversation" about it here, on this blog. If you read something you find intriguing, please comment or ask your questions! I am also the author of the books: Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned at School & The Global Expatriate's Guide to Investing. If you'd like to find out more about my investing philosophy, read my "Nine Laws to Financial Freedom." Sign up for it and a bonus Investing Strategy below. Free!

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